In afternoon of April 30, 2007, China's Ministry of Commerce and General Administration of Customs jointly issued a statement (Document no. 41 of 2007) announcing a new steel export license system to take effect from May 20 onward. The new export license system covers only 83 HS steel product codes instead of all steel products; furthermore, the export rebate for the 83 product codes in question was recently cut from eight percent to zero.
This is China's first time introducing an export license system for steel exports and is an indication of the central government's resolve to curb steel exports. However, it is still not certain that this will be the final measure that the Chinese government will need to take.
After May 20, local steel exporters will have to submit the following additional documents to customs, besides the normal necessary export documents - the signed product sales contract, and also a correctly-filled export license form. This latter form is very simple and requires just the following information; the names of the seller and buyer, the destination country, commodity specification, quantity, and value. Furthermore, the application procedure for the license is comparatively easy. One to two weeks will be needed to obtain the approved license, at a cost of less than RMB 100 for each license.
According to internal Chinese government indications, the steel export license system is intended simply to aid the compilation of steel export data. and to allow the government more rapid access to the latest steel export situation.
Currently, the Chinese government has no intention of severely restricting steel exports by means of complicating the license approval procedure. The steel export license is to be like an application-and-record system and will not have a great impact on steel products exports.
The export license is just the beginning of the next round of measures to curb steel exports. If steel exports remain at elevated levels in the near future, it will become more difficult to obtain a steel export license from the government. Many middle and small steel traders will not receive licenses and only the license demands of big local steel mills will be met, though under preconditions. As regards the more severe measure of a steel export quota system, so far there is no indication that the government will go down this path soon. However, this option may be taken into account in the future if steel exports continue to increase beyond the government's bottom line.